Megacities

discovering potential
How to approach this new market
Emergence of a new market/channel
huge untapped potential for Nordic companies
25 megacities: 470 million inhabitants a market larger
than the European and US markets
Investing in urbanisation the example of China
New G2M approach needed from "micro-thinking" to
"macro approach"
Reaching an attractive position four elements to address
2
Quartz+Co is setting a new agenda concerning megacities as a potential
new market/channel for many Nordic companies
Quartz+Co works with
several customers for
whom the megacities of
the world are becoming
a very attractive
segment however, the
key issues are
How to structure the
go-to-market model?
What product/solution
to offer to whom?
Whom to partner with
in order to be part of
the "game"?
Source: Quartz+Co feature in Berlingske Tidende, October 2011
3
Today, there are 25 megacities in the world with a combined population
of 470 million inhabitants a market that is greater than both the
European market and the US markets
470
Top-25
megacities
in the world
399
EU15
313
USA
Tokyo
(34.3 million)
Top-25 megacities in the world with estimated populations
Inhabitants
Comparison of population size
Million inhabitants
Note: Population figures are from July 2011. Figures include urban areas
Source: CIA World Fact Book
Jakarta
(18.9 million)
Seoul
(25.1 million)
New York City
(22 million)
Mexico City
(22.9 million)
London
(12.5 million)
Moscow
(14.8 million)
Kolkata
(16.6 million)
Mumbai
(23 million)
Osaka
(16.7 million)
Manila
(20.3 million)
Rio de Janeiro
(12.5 million)
So Paolo
(20.9 million)
Buenos Aires
(14.4 million)
Istanbul
(13 million)
Tehran
(13.1 million)
Lagos
(12.1 million)
Karachi
(17 million)
Cairo
(15.3 million)
Dhaka
(14 million)
Guangzhou
(25.2 million)
Beijing
(13.9 million)
Shanghai
(24.8 million)
Los Angeles
(18.1 million)
Delhi
(23.3 million)
4
The pace of the world's urbanisation rate will continue, and future
investments are expected to be significant
2010 2015 2020
Rural
areas
50%
(6.84)
48%
(7.22)
46%
(7.57)
2025 2030
43%
(7.91)
41%
(8.22)
50%
Urban
areas
52%
54%
57%
59%
Share of the world's population living in urban areas
Per cent (billion people)
Example of Chinese investments in megacity
developments
China is planning
to invest DKK
1,800 billion
across 160
infrastructure
projects over the
next years to
merge nine cities
in South China,
creating a city
with 42 million
inhabitants
Total investment in urban infrastructure in China
over the next five years is expected to hit GBP 685
billion, with an additional GBP 300 billion spend on
high speed rail and GBP 70 billion on urban
transport
British Chamber of Commerce
Source: World Economic Forum; The Economist; British Chamber of Commerce
5
The traditional go-to-market approaches will not be suitable when
addressing this new market as demand is moving from "micro-thinking"
to "macro approach", introducing new decision models in the market
Traditional go-to-market approach Market approach towards megacities
From a micro-thinking approach with multiple customer
touchpoints across sectors
to a macro approach where purchasing decisions
are co-ordinated and made on an aggregated level
across sectors
ILLUSTRATIVE
Suppliers Suppliers Suppliers Suppliers
Energy Transport Water Buildings
Energy Transport Water Buildings
Master-
planning
Suppliers
6
The change in market logic will drive a shift in demand from single
components to integrated infrastructural solutions consisting of multiple
components, advising and services
Energy production
and distribution
Component 1
Component 2
Component 3
Component 4
A
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Megacities are demanding integrated solutions in which
previously independent components and services are bundled
ILLUSTRATIVE
7
Megacities is one of four key strategic focus areas for Siemens and an
opportunity for the company to leverage its diversified portfolio to one
defined customer segment
The new Infrastructure & Cities
Sector will manage the company's
global business with cities and
infrastructures. The new Sector, with
around 87,000 employees, will
contain the Mobility and Building
Technology Divisions from the
Industry Sector, as well as the Power
Distribution Division and Smart Grid
business from the Energy Sector.
Siemens, September 2011
CASE
8
In order to obtain an attractive position within the megacity
market/channel, a potential player needs to address four elements
Underlying issues
Product
offering
1
To what extent is your stand-alone offering unique and innovative in the market in terms
of other solutions from competitors and substitutes?
Organisational
capabilities
4
What are the organisational requirements needed to be able to address this new
channel/market?
To what extent do your current competences match the needs?
How can your company best succeed in the market with the new channel needs and
market logic?
As a stand-alone company only offering own products and services
Through partnerships with other players offering more integrated solutions
Go-to-market
model
2
Business
strategy
How, and in what order, should you address the different subsegments in the market
(cities/geographies)?
3